Special Notice to Clients — 

This checklist was prepared for our clients and friends as a quick way to identify eligible programs. Please contact us for the details. Many of the details are not available yet from the government.

This is not meant to be an all-inclusive summary of the extensive programs.

 

Delays in Filing and Paying

        Federal tax payments and returns due 4/15/20 are delayed until 7/15/20

        For individuals, trusts, estates, partnerships, associations, companies and corporations

        Automatically postpones all 4/15/20 filings without a limit on amount

        Includes 1st and 2nd quarter 2020 federal estimates

        Penalties and interest are waived for this 90 day period

        Includes individual, trust, gift tax, and C corporation returns that were due 4/15/20 – 7/15/20

       Payments for IRA’s, HSA’s, MSA’s are also delayed until 7/15/20

        2016 claim for refund (statute of limitation issues) is not delayed

        Most states will follow suit for a delay in payment and filing

 

Direct Payments (Rebates) to Individuals

        Individuals with adjusted gross income (AGI) ≤ $75,000 receive $1,200

        Married couples with AGI ≤ $150,000 receive $2,400

       Head of households with AGI ≤ $112,500 receive $1,200

        Parents with children under age 17 receive $500 / child

        Phase-outs occur for individuals from $75,001 – $99,000 and married couples from $150,001 – $198,000

        Rebate is reduced by $5 for each $100 that exceeds the above AGI

        Income is based on 2018 return unless 2019 return is filed

        Money is now being sent (up to 12/31/19) by direct deposit if that info is available or by check otherwise

        Rebate is not subject to tax

       Receive even if you don’t file a return as long as you have a SSN and are not claimed by someone else

        Reconciliation on 2020 return (Keep if you got too much and claim a credit if you got too little based on 2020 income)

 

Expanded Unemployment Benefits

        Extra $600 / week for 4 months (in addition to state benefit)

        Maximum of 39 weeks for combined federal and state assistance

        Self-employed and independent contractors would be eligible

 

Retirement Account Withdrawals

        Required minimum distributions (RMD) for 2020 can be waived

        10% penalty is waived on up to $100,000 distributions (must be used for Corona related purposes)

        Started 1/1/20

        Can be repaid within 3 years or are taxed over 3 years (can elect out of 3 year spread)

 

Student Loans Held by the Dept. of Education

        All payments can be suspended through 9/30/20

        0% interest will accrue

 

Federally Backed Mortgage Loans such as FNMA and FHLMC

        180 day forbearance can be requested by the borrower

        No fees, penalties or interest beyond contractual amounts will be added

 

Above-the-Line Charitable Deduction

        Maximum $300 during 2020

        Permitted even if you don’t itemize

        Donations to a donor advised fund don’t count

 

Qualified Family Leave

        Employees unable to work or telework who leave for care of a child under age 18 (school or childcare is closed)

        Wages paid 4/1/20 to 12/31/20

        Employed at least 30 days

        First 10 days may be unpaid but employee can use vacation, personal, medical or sick leave benefits

        After 10 days, paid leave is required (2/3 of normal gross pay not to exceed $200 / day)

        The aggregate maximum is 10 weeks and $10,000

 

Qualified Sick Leave

        Unable to work or telework for specific virus-related reasons

        Subject to quarantine, isolation order, advised by health provider to self-quarantine, and experiencing symptoms

        80 hours of paid sick time to full-time employees

        Part-time employees based on average hours worked over a 2 week period

        No limit for length of service

        Regular rate up to a maximum of 10 days at $511 / day not to exceed $5,110 / employee to take care of self

        Regular rate up to a maximum of 10 days at $200 / day not to exceed $2,000 to take care of someone else

 

Qualified Family or Sick Leave General Rules

        Small business (< 50 employees) exemptions are coming

        Increased by portion of qualified health plan expenses

        Increased by 1.45% Medicare tax

        Not subject to 6.2% SS tax

        Refundable tax credit if it exceeds the credit on employer’s payroll tax

        Comparable credits are offered to self-employed individuals (net earnings divided by 260 days)

 

Small Business (generally < 500 employees) Loans (Paycheck Protection Program)($730 Billion)

        Covers employee payroll costs

        Administered by banks who are certified SBA Lenders (guaranteed 100% by SBA)

        Eligible if in operation on 2/15/20

        Sole proprietors and independent contractors (self-employed) are eligible and use net Income from self-employment

        Qualified expenditures include payroll, group health care, mortgage interest, rent, utilities, interest on existing debt

        Payroll costs include salary, commission, tips, health care insurance, and state unemployment

        Employees and self-employed have qualifying costs up to $100K

        Those having a principal residence outside the US do not qualify

        Utilities include electric, gas, water, transportation, phone, and internet

        6/30/12 is last day to apply or receive a loan but it is first come first serve…move quick!!!

        Loan is 2.5 * monthly payroll costs (over 12 months prior to loan) (special seasonal and industry rules) up to $10 million

        Interest at 1% loan with a 2 year maturity

        Payments will be deferred for a minimum of 6 months from date of loan disbursement

        No collateral, personal guarantees or recourse to owners

        Funds should be used during the covered period in the 8 weeks after loan origination (loan can be forgiven in whole or part)

        Loan principal is forgiven for proceeds used over an 8 week period for qualified costs listed above

        The 8 week period begins on the date of the loan origination

        Expected forgiveness is the amount lender expects borrower to expend

        At least 75% of the loan must be used for payroll costs to have full forgiveness

        Amount forgiven is reduced if FTE headcount declines or salaries decrease

        Start gathering monthly payroll (W-2’s and 941’s) and self-employed information (Sch C and bank stmts) for 2019 and 2020

        Applicant must submit SBA Form 2483 to the bank and whatever forms the bank requires (varies by bank)

        Deductions for tax exempt PPP loan is not deductible

 

SBA Economic Injury Disaster Loans (EIDL) (< 500 employees)

        Emergency advance (grant) up to $10,000 within 3 days of applying (have not seen any of these after weeks)

        Up to $2M in loans (amounts over $10,000 are loans at 3.75% for up to 30 years) (Non-profits get 2.75%)

        Must have been in business as of 1/31/20

        Loans available from 1/31/20 – 12/31/20

        Includes sole proprietors with and without employees

        Can still do the paycheck protection program above but the $10,000 will be applied against the loan

 

Employee Retention Credit

        For employers whose operations were fully or partially suspended as a result of a government order; or

        For employers who had a significant decline in gross receipts (declined by > 50% from same quarter in prior year)

       Employers with ≤ 100 employees, all wages are eligible (limits if >100)

        Refundable payroll tax credit of 50% of wages (new IRS Form 7200)

        Up to $10,000 / employee / quarter

        Cannot use this credit and the small business loan above

        Relates to wages paid 3/13/20 – 12/31/20

 

Payroll Tax Payment Delay

        Employers and self-employed

        6.2% matching money

        3/27/20 – 12/31/20

        Pay ½ by 12/31/21 and ½ by 12/31/22

 

Employer Payments of Student Loans

        Tax free to the employee with a maximum of $5,250

        Paid by employer for employee

        3/27/20 – 1/1/21

 

Net Operating Loss Expansion

       NOL’s generated in 2018, 2019 or 2020 can be carried back 5 years

       The 80% limit on NOL’s is suspended to fully offset income

 

Business Interest Deduction

        Business interest deduction was increased from 30% of taxable income to 50% of taxable income

 

Qualified Improvement Property Technical Correction

        100% bonus depreciation is permitted on interior improvements for non-residential property

        Retroactive for improvements after 9/27/17 filed on Form 3115 Change in Accounting

 

Loans to Certain Industries (the Big Winners)

        Air and cargo carriers

        Businesses critical to national security

        Hospitals

        Many government branches

        Education

 

Ohio Considerations

        Ohio and most Ohio cities have delayed filing and payment date to 7/15/20

        Ohio Dept. of Insurance – employees with reduced hours still can have group coverage, health insurance payments can be delayed for 60 days, COBRA and continuation rules are loosened for now

        Ohio unemployment pays 50% of average weekly wage with a $118 minimum / week and a $424 maximum / week for 26 weeks

 

Other Considerations

        Business interruption insurance – hard to prove claim

        Business liability insurance – are you exposing employees or clients to the virus

        Workers compensation – probably not but health care workers maybe

        Off premise insurance – have you thought about property being kept offsite now

        Employee rights must be posted by 4/1/20

        Proactively call lenders and work out payment arrangements

        Stay safe!!!

 

Clickable Links to Helpful References

        Coronavirus Aid Relief and Economic Security Act (CARES Act) (3/27/20)

        Families First Coronavirus Response Act (3/18/20)

        IRS People First Initiative

        Loan Forgiveness Details

        SBA emergency $10K advance for EIDL

        IRS Interim Final Rule

        DOL Q & A

        SBA EIDL Loans

        SBA Paycheck Protection Program

        IRS Interim Final Rule

        IRS information

        IRS Notice 2020-32 – Deductibility of PPP expenses

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